“A STUDY ON MARKET EVALUATION AND ITS IMPACT

ON PERFORMANCE OF MUTUAL FUNDS WITH

REFERENCE TO ADITYA BIRLA”

CHAPTER 1

INTRODUCTION

Part A – About Industry

Introduction to Financial services

In India financial system is broadly classified into financial institutions, financial markets,
financial intermediaries and financial services. And financial services are again divided
into fund based and fee based services. India has a diversified financial sector undergoing
rapid expansion, both in terms of strong growth of existing financial services firms and
new entities entering into the market. The sector comprises of commercial banks,
insurance companies, non banking financial companies, pension funds and mutual funds.

chart showing the classification of Indian financial system

Indian financial
system

Financial
Services
Financial
Markets
Financial
Fund based Institutions
Services
Money
Markets
Banking
Fee based Institutions
Services
Capital
Markets
Non banking
Institutions

Page 1
Meaning of Financial Services

In general, all types of activities which are of financial nature may be regarded as
financial services. In the real term financial services means mobilization and
allocations of savings, it includes all activities involved in the transformation of savings
into investments.

The finance industry consists of broad range of organizations that deal with the
management of money. These organizations includes banks, credit card companies,
insurance companies, stock brokers, investment funds and some government sponsored
enterprises. All these organizations helps investors meet their desired investment plan
and help them in wealth creation. For e.g.: There are dedicated fund managers in mutual
funds who takes care of the portfolio of investors and help them decrease their risk and
helps in maximizing the returns through analyzing the markets. For this work fund
managers take a nominal charge for maintaining the portfolio.

Chart showing types of financial services

Chart showing the services included in Financial services

 Definition of Financial services:

Financial services can be defined as “the product and services offered by institutions
like banks of various kinds for the facilitation of various financial transactions and
other related activities in the world of finance like loans, insurance, credit cards,
investment opportunities and money management as well as providing information on
the stock market and other issues like market trends”.

Importance of financial services:

It is the presence financial services that enables a country to improve its economic
condition whereby there is more production in all the sectors leading to economic
growth.

The benefit of the economic growth is reflected on the people in the form of economic
prosperity wherein the individual enjoys higher standard of living. It is here the
financial services enable an individual to acquire or obtain various customers products
through hire purchase, in the process there are number of financial institutions which
also earns profit. The presence of these financial institutions promotes investment,
production, savings etc.

Features of financial services

 Promoting investments: the presence of financial services creates more demand for
products and the producer, in order to meet the demand from the consumer goes for
more investment. At this stage, the financial service comes to the rescue of the investor
such as merchant banker through new issue market enabling the producer to raise
capital.
The stock market helps in mobilizing more funds by the investor. Investments from
abroad are attracted. Factoring and leasing companies, both domestic and foreign
enable the producer not only to sell the products but also to acquire modern technology
for further production.
  Minimizing the risk: the risks of both the financial services as well as producers
are minimized by the presence of insurance companies. various types of risks are
covered which are not only offer protection from the fluctuating business condition but also
from risk caused by natural calamities.

 Channelizing Funds: It is well established fact that financial system is a critical

element of any economy. Financial sector and financial markets perform the
essential function of channelizing funds from people who have saved surplus funds
by spending less than their income to people who have a shortage of investible
funds because their plans to spend exceed their income.

 People based services: marketing of financial services has to be people

intensive and hence it's subjected to variability of performance or quality of service.
The personnel in financial services organisation need to be selected on the basis of
their suitability and trained properly, so that they can perform their activities
efficiently and effectively.

 Economic growth: The development of all the sectors is essential for the
development of the economy. The financial services enable the producer to
not only earn more profits but also maximize the wealth. financial services
enhance their goodwill and induce them to go in for diversification. th stock
market and the different types of derivative market provide ample opportunities to
get a higher yield for the investor.

The financial services are again divided into Fund based services and Fee based
services.

Fund based services:

 Involve provision of funds against assets, bank deposits, etc.

 Fund based income comes mainly from interest spread which means difference
between the interest earned and interest paid, lease, rentals, income from investments
in capital market and real estate.
 Major part of the income is earned through fund based activities. at the same time, it
involves a large share of expenditure also in the form of interest and brokerage.
 Examples:

 Underwriting shares, debentures, bonds, etc.

 Equipment leasing
 Hire purchase
 Bill discounting
 Venture capital
 Housing finance
 Insurance services
 Factoring
 Equipment leasing: A lease is an agreement under which a company or firm
acquires a right to make use of a capital asset like machinery, on payment of a
prescribed fee called ‘rental charges’.
 Hire purchase: hire purchase is a mode of financing the price of the goods to be
sold on a future date. In a hire purchase transaction, the goods are let on hire, the
purchase price is to be paid in installments and hirer is allowed to an option to
purchase the goods by paying all the installments.
 Bills discounting: Bill discounting is a short tenure financing instruments for
companies willing to discount their purchase/sale bills to get funds for the short run
and as for the investors in them, it is a good instrument to park their spare funds for
a very short duration.
 Factoring: The factoring firms purchase the receivables outright taking ownership
of the receivables. The entire responsibility of collecting the book debts passes on
to the factor.
 Insurance services: insurance is a form of risk management in which the insured
transfers the cost of potential loss to another entity in exchange for monetary
compensation known as premium.
 Mutual funds: A mutual fund refers to a fund raised by financial service company
by pooling the savings of the public. it is invested in a diversified portfolio with a
view to spreading minimizing the risk.
Fee based services

Fee based income does not involve much risk. but, it requires a lot of expertise on the
part of a financial company to offer such fee-based services.

Examples:
 corporate advisory services
 bank guarantees
 merchant banking
 issue management
 loan syndication
 credit rating
 stock broking
 Merchant banking: A merchant banker is a financial intermediary who helps to
transfer capital from those who possess it to those who need it. merchant banking
includes a wide range of activities such as management, of customer securities,
portfolio management, project counseling and appraisal, underwriting of shares
and debentures, loan syndication, acting as banker for the refund order, handling
interest and dividend warrants etc.
 Loan syndication: it is similar to consortium financing. which is taken by the
merchant banker as a lead manager. it refers to a loan arranged by a bank called
lead manager for a borrower who is usually a large corporate customer or a
government department. it also enables the members of the syndicate to share the
credit risk associated with a particular loan among themselves.
 Credit rating: evaluates the credit worthiness of a debtor, especially a business
or government. it is an evaluation made by a credit rating agency of the debtors
ability to pay back the debt and the likelihood of default.
PART – B: ABOUT SUBJECT

ABOUT MUTUAL FUNDS

Introduction to mutual funds:

Mutual fund is a vehicle to mobilize money from investors, to invest in different
markets and securities, in line with the investment objectives agreed upon, between the
mutual fund and the investors. In other words, through investment in a mutual fund, an
investor can get access to markets that may otherwise be unavailable to them and avail
of the professional fund management services offered by an asset management
company.
Mutual funds seek to mobilize money from all possible investors. Various investors
have different investment preferences and needs. In order to accommodate these
preferences, mutual funds mobilize different pools of money. Each such pool of money
is called a mutual fund scheme.
Every scheme has a pre-announced investment objective. Investors invest in a mutual
fund scheme whose investment objective reflects their own needs and preference.

Meaning of mutual funds

Mutual fund is a mechanism for pooling the resources by issuing units to the investors
and investing funds in securities in accordance with objectives as disclosed in offer
document each mutual fund has its own investment objective such as capital
appreciation, high current income or money market income.

History of Indian mutual fund industry:

The first company that dealt in mutual funds was the UNIT TRUST OF INDIA. It was
setup in 1963 as a joint venture of the reserve bank of India and the government of
India. The objective of the UTI was to guide small and uninformed investors who
wanted to buy shares and other financial products in larger firms. UTI was a monopoly
in those days. one of its mutual funds products that ran for several years was the unit
scheme 1964.

The mutual fund industry in India has undergone at least 4 phases.

Phase 1
Phase of inception (1964-87)
The first phase was marked by the setting up of the UTI. Though it was a collaboration
between the RBI and the Indian Government, the latter was soon delinked from the
day-to-day operations of the Unit Trust of India. In this phase, the company was the
sole operator in the Indian mutual fund industry. In 1971, the UTI launched the Unit
Linked Insurance Plan or the ULIP. From that year until 1986, UTI introduced several
plans and played a very big role in introducing the concept of mutual funds in India.
When UTI was set up several years ago, the idea was to not just introduce the concept
of mutual funds in India; an associated idea was to set up a corpus for nation-building
as well. Therefore, to encourage the small Indian investor, the government built in
several income-tax rebates in the UTI schemes. Not surprisingly, the investible corpus
of UTI swelled from 600 crores in 1984 to 6,700 crores in 1988. Clearly, the time had
come for the Indian mutual industry to move into the next phase.

Phase 2
Entry of public sector (1987-93)
By the end of 1988, the mutual fund industry had acquired its own identity. From 1987,
many public sector banks had begun lobbying the government for starting their own
mutual fund arms. In November 1987, the first non-UTI Asset Management Fund was
set up by the State Bank of India. This AMC was quickly followed by the creation of
other AMCs by banks like Canara Bank, Indian Bank, Life Insurance Corporation,
General Insurance Corporation, and Punjab National Bank.
This opening up of the mutual fund industry delivered the desired results. In 1993, the
cumulative corpus of all the AMCs went up to a whopping Rs. 44,000 crores.
Observers of this industry say that in the second phase, not only the base of the industry
increased but also it encouraged investors to spend a higher percentage of their savings
in mutual funds. It was evident that the mutual fund industry in India was poised for higher
growth.
 Phase 3
Entry of private sector Phase (1993-96)
In the period 1991-1996, the Government of India had realized the importance of the
liberalization of the Indian economy. Financial sector reforms were the need of the
hour. India needed private sector participation for the rebuilding of the economy.
Keeping this in mind, the government opened up the mutual fund industry for the
private players as well. The foreign players welcomed this move and entered the Indian
market in significant numbers. In this period, 11 private players –in collaboration with
foreign entities- launched their Asset Management Funds.
Some of the top AMCs in the private sector were:
• ICICI Prudential AMC- This Company is a joint venture between ICICI Bank of India
and Prudential Plc of UK. It manages a corpus of INR 2, 93,000 crores and has an
inventory of more than 1400 schemes.
• HDFC Mutual Fund- Launched in the 1990s, the HDFC Mutual Fund manages more
than 900 different kinds of funds.
• Kotak Mahindra Mutual Fund- This AMC has an asset base of more than Rs. 1,19,000
crores. It is a joint venture of Kotak Financial Services and the Mahindra Group.

Phase 4
Consolidation phase (2003-2014)
In February 2003, the Unit Trust of India was split into two separate entities, following
the repeal of the original UTI Act of 1963. The two separated entities were the UTI
Mutual Fund (which is under the SEBI regulations for MFs) and the Specified
Undertaking of the Unit Trust of India (SUUTI). Following this bifurcation of the
former UTI and occurrence numerous mergers among different private sector entities,
the mutual fund industry took a step towards the phase of consolidation. After the
global economic recession of 2009, the financial markets across the globe were at an
all-time low and Indian market was no exception to it.
Majority of investors who had put in their money during the peak time of the market
had suffered great losses. This severely shook the faith of investors in the MF products.
The Indian Mutual Fund industry struggled to recover from these hardships and
remodel itself over the next two years. The situation toughened up more with SEBI
abolishing the entry load and the lasting repercussions of the global economic crisis.
This scenario is evident from the sluggish rise in the overall AUM of the Indian MF
industry.
 Types of mutual fund:

chart showing the types of mutual funds.

 Mutual funds can be classified as follows:
 1.4.1 Based on their structure:
 Open ended funds: An open-ended scheme allows investors to invest in additional
units and redeem investment continuously at current NAV.
 Closed ended funds: A closed end scheme is for a fixed period tenor. it offers units
to investors only during the new fund offer (NFO).
 1.4.2 Based on their investment objective :
 Equity fund: equity funds invest in a portfolio of equity shares and equity related
instruments. since the portfolio comprises of equity instruments the risk and
returns from the scheme will be similar to the equity market. equity funds can be
further classified as follows:
i. Index funds: A index fund is a type of mutual fund with a portfolio constructed to
match or track the components of a financial market index, such as S&P BSE 100,
S&P BSE 200. it provides broad market exposure and low profit turnover.
ii. Thematic fund: Theme based funds invest in multiple sector and stock forming the
part of a theme. for eg if the theme is infrastructure then companies in the
infrastructure sector comprises construction, cement, banking and logistics .
iii. Sector funds: sector funds invest in the companies that belong to a particular sector
such as Banking, automobiles, IT, etc. it has a higher risk since there is no
diversification since such funds are concentrated on a particular sector.
iv. ELSS (Equity linked saving scheme): ELSS is a type of mutual fund which gives
the investor tax deduction benefits under section 80c of the income tax up to a
limit of rs 1500000 per year. An ELSS must hold atleast 80% of the portfolio in
equity securities. the investment made are locked in for a period of 3 years during
which it cannot be redeemed.
  Debt funds: Debt fund invest in a portfolio of debt instrument such as government
bonds, corporate bonds, and money market securities. debt instruments have
predefined coupon or income stream. Fund managers have to maintain credit risk.
Debt instrument may also see a change in prices or values in response to change in
interest rates in the market. debt funds can be categorized as follows:
i. Gilt funds: gilt funds invest in government securities of medium and long term
maturities. There is no risk of default and liquidity is considerably higher in case
of government securities. However prices of government securities are very
sensitive to interest rate changes. Gilt funds are popular with investors mandated
to invest in G-secs such as provident funds or PF trusts.
ii. Debt funds: schemes with an investment objective that limits them to investments
in debt securities such as treasury bills, government securities, bonds and
debentures are called debt funds.
iii. Liquid funds: liquid funds are those where corpus gets invested in money market
instruments the maturity period is under 91 days, all liquid funds are open ended
by nature where in money can be invested any time and redeemed within 24 hrs
( on working day only).
iv. ultra short term funds: These are improvised version of liquid funds the difference
being with the maturity period of papers. which are marginally higher compared to
liquid fund. ranging from 3months to one year.
v. income fund: invests in a mix of government and non government debt securities
such as corporate bonds, debentures and commercial paper. The corporate bonds
earn higher coupon income on account of the credit risks associated with them. the
government securities are held to meet liquidity needs and to exploit opportunities
to capital gains arising firm interest rate movements.
vi. junk bond scheme: junk bond schemes are high yield bond schemes invest in
securities that have a lower credit rating indicating poor credit quality. such
schemes operate on the premises that the attractive returns are offered by th
 investee companies makes up gor the losses arising out of a few companies
defaulting.
 Balanced or Hybrid funds: A balanced fund is a mutual fund that contains a
stock component, a bond component and sometimes money market component in
a single portfolio. generally these funds stick to a relatively fixed mix of stocks
and bonds. their holdings are balanced between equity and debt with their
objective between growth and income. the balanced funds are categorized into:
i. Equity oriented scheme: this is a type of the mutual fund investment where the
investments are predominantly more in the equity class. for ex 60 to 80% of the
holdings in the portfolio will be in equity class and another 20% in debt
instrument.
ii. debt oriented scheme: this is the type of mutual fund investment where the
investments are mainly invested in debt oriented schemes. this scheme provides
low risk as the investments are mainly in debt like gilt funds, income funds etc
which are government bonds which carries a fixed tenor with the coupon rate.
 Structure of mutual fund:

chart showing the work flow of mutual funds

SPONSOR:
The sponsor is the promoter of the mutual fund. The sponsor brings in capital and
creates a mutual fund trust and sets up the AMC (asset management company).
among other requirement the sponsor should also have a 5 year track record in the
financial services business and should have made profit in at least 3 out of the 5
years. the sponsors could be a bank, a corporate or a financial institution.

TRUSTEE:
sponsor appoints the trustee. the trustees shall ensure that the AMC has put in place
adequate back office, dealing and accounting systems. the trustee shall ensure that
the AMC has appointed all key personnel, including fund manager for the various
schemes, auditors compliance officers, registrars etc
The trustee should also ensure preparation of the compliance manual and design
internal control mechanisms, including internal audit systems. the trustee shall ensure
that the transactions entered into by the asset management company are in
accordance with regulations of SEBI and the regulation of the scheme.

AMC (Asset Management Company):

Trustees appoint the Asset Management Company as the Investment Manager of the
Trust, on the recommendation of sponsor. Trustees are authorized to appoint AMC as
per the trust deed. The trustees enter into an agreement with the AMC known as
‘Investment Management Agreement’, which contains all the functions, duties and
rights of the AMC as an Investment Manager.
AMC is an operational arm of the mutual fund trust). AMC is responsible for
carrying out all functions related to management of the assets of the trust.
The AMC structures various schemes, launches the scheme and mobilizes initial
amount, manages the funds and give services to the investors. Later on, AMC
appoints other constituents like Registrar and Transfer agents, Distributors, Bankers,
Brokers, Auditors, Lawyers etc. and works in close co-ordination with them. Since
this group is appointed and answerable to the Sponsor of this Mutual Fund

REGISTRAR & TRANSFER AGENTS:

It is the sole responsibility of an R&T agent to maintain the records of all such
transactions carried by them on behalf of the fund house, through various branches of
offices set up in various parts of the country. These agencies act as a single window
system for investors. this provides investors with a simplified method to receive
forms of their fund houses. this also helps compete their transactions and even
receive a record of their account statements.

FUND MANAGER:
As an investor, when you choose to invest in a mutual fund. it involves building a
portfolio of securities. it is the fund manager who, based on research and analysis,
make the decisions pertaining to buying and selling.
 Advantages of mutual funds
 Number of options available: mutual fund invest according to he underlying
investment objective as specified at the time of launching a scheme. mutual fund has
equity funds, debt funds, hybrid funds that cater to the different needs of the investor.
while equity funds can be as risky as the stock market themselves, debt funds offer
the kind of security that is aimed for at the time of making investments. the only
factor here is that the fund has to be selected keeping the risk profile of the investor.
 Diversification: diversification reduces the risk because all stocks don’t move in the
same direction at the same time. one can achieve this diversification through a
mutual fund with far less money.
 Professional management: mutual fund employ the services of the skilled
professionals who have years of experience to back them up. they use intensive
research technique to analyze each investment option for the potential of returns
along with their risk levels to come up with figures for the performance that
determine the suitability of any potential investment.
 potential returns: returns in the mutual funds are generally better than any avenue
over a reasonable period of time. People can pick their investment horizon and stay
invested in the chosen fund for the duration.
 liquidity: Mutual funds are another most liquid investment opportuinity, like
individual stocks investors can sell their mutual funds units as and when wish to in
the open ended scheme in close ended scheme also they can sell of the units which
attracts penalty i.e. exist load of 1% on NAV.
 Systematic approach of investments: mutual funds also offer facilities that help
investors invest amounts regularly through a systematic investment plan (SIP); or
withdraw amount regularly through a systematic withdrawal plan (SWP); or move
money between different kinds of schemes through a systematic transfer plan (STP);.
Such systematic approaches promote investment discipline, which is useful in long
tern wealth creation and protection. SWPs allow the investor to structure a regular
cash flow from the investment account.
 Disadvantages of mutual funds:

 no control over costs: all the investors money is pooled together in a scheme. costs
incurred for managing the scheme are shared by all the unit holders in proportion to
their holdings of units in all the scheme. therefore, an individual investor has no
control over the costs in a scheme. SEBI has however imposed certain limits on the
expenses that can be charged to any scheme. these limits which vary with the size of
assets and nature of the scheme.
 too many schemes: over 2000 mutual funds schemes offered y 47 mutual funds and
multiple options within those schemes make it difficult for investors to choose
between them. greater dissemination of scheme information through various media
channels and availability of professional advisors in the market help investors to
handle this overload.
 fluctuating returns: mutual funds do not offer fixed guaranteed returns in that you
should always be prepared for any eventuality including depreciation in the value of
your portfolio. Mutual fund entail a wide range of price fluctuations. professional
management of a fund by a team of experts does not insulate ypu from bad
performance of your fund.
meaning of Small, mid and large cap funds:
 Small cap funds: small cap stocks are typically have the highest growth potential,
small cap is a term used to classify companies with relatively small market
capitalization. a company’s market capitalization is the market value of its
outstanding shares. the definition of small cap can vary among brokerages, but it is
generally a company with a market capitalization between US$300 million and
$2billion.
 mid cap funds: a mid cap fund is type of investment fund that focuses its investment
on companies with a capitalization in the middle range of stocks in the market.
companies with ,market capitalization ranging from $2 billion to $10 billion are
typically considered mid cap companies.
 large cap funds: large cap funds are those funds which incest a larger portion of their
corpus in companies with large market capitalization. trustworthy, reputable and
 strong are three objectives that are often used to describe a large cap company. these
are the old and well established players with a track record.

1.1 Table showing the risk and returns of the sectors

1.8 Top performing small cap funds in India

1 Year 3 Year 5 Year

Fund Name
Return Return Return

Axis Small Cap

0.73% 13.25% 19.54%
Fund

Franklin India
Smaller 0.63% 4.20% 10.14%
Companies Fund

HDFC Small Cap

0.92% 20.97% 19.82%
Fund

L&T Emerging
-3.36% 9.23% 14.35%
Businesses Fund

Reliance Small
-6.99% 18.37% 24.63%
Cap Fund

1.2 Table showing the performance small cap funds in India

1. Axis Small Cap Fund

Axis Small Cap Fund is a well-performing small cap fund which was launched in
November, 2013. The scheme has demonstrated an attractive performance over both
the short term and long term periods. It is a relatively aggressive fund which has no
exposure to the large caps. The scheme has maintained its aggressive stance in the
sector-wise allocation of funds also as it has given a higher weightage to
consumption-driven sectors, such as Chemicals and Industrial Manufacturing than
defensive sectors in its portfolio.

2. Franklin India Smaller Companies Fund

Franklin India Smaller Companies Fund is a veteran of the category which has been
present in the space since January 2006. The scheme features an extraordinary
performance record as depicted in the above graph. The scheme follows a balanced
approach in allocation of its assets. It has adopted a relatively conservative
approach while allocating its assets across market capitalisations (15% in large caps)
and an aggressive approach while allocating them across sectors (more of cyclical
sectors).

3. HDFC Small Cap Fund

HDFC Small Cap Fund is a time-tested fund which has been there in the category for
over a decade now. It is a relatively aggressive small cap fund which holds just 6%
of its assets in large caps. As far as the sector-wise allocation is concerned, the
scheme is slightly more bullish on consumption-driven sectors than defensive
sectors like pharmaceuticals. The aggressive approach of the scheme gives it the
potential to earn high returns for relatively high risk.

4. L&T Emerging Businesses Fund

L&T Emerging Businesses Fund is a relatively recent addition to the small cap
category but has succeeded in acquiring a position in the list of best small cap funds
for 2019 owing to its extraordinary performance. The scheme, which was launched
in May 2014, is an aggressive small cap fund which has invested more than half of
its assets in small caps and almost the entire balance in mid caps. The scheme is
 aggressive in sector-wise allocation of its funds as well as it has given a higher
weightage to cyclical sectors in its portfolio than defensive sectors.

5. Reliance Small Cap Fund

Reliance Small Cap Fund is a relatively conservative small cap fund, which opened
for continuous subscription in September 2010 and has given a weightage of 10% to
large caps in its portfolio. The scheme has balanced off its conservative stance by
holding around more than 50% of its assets in the stocks of consumption-dependent
sectors like Consumer Durables and Industrial Capital Goods. It is an ideal scheme
for long-term capital growth.

1.9 Top performing mid cap funds in India:

Here are the top 5 midcap funds which can help you generate and appreciate your
wealth in 2019:

1 Year 3 Year 5 Year

Fund
Return Return Return

Kotak
Emerging -8.19% 13.00% 21.13%
Equity Scheme

L&T Midcap
-11.51% 15.65% 20.92%
Fund

INVESCO
India Midcap -3.23% 13.14% 18.29%
Fund

DSP Midcap
-7.49% 14.27% 19.68%
Fund

HDFC
Midcap - 13.45 18.30
Opportunities 9.60% % %
Fund
1. Kotak Emerging Equity Scheme
Kotak Emerging Equity Scheme is one of the veterans mid cap funds which has been
in the space for more than a decade now. It is a well-performing scheme which has
outperformed its benchmark during both short and long term periods. It is a relatively
aggressive mid cap fund which has given minimal exposure to large caps in its
portfolio and has invested a majority of its assets in consumption-driven sectors.
2. L&T Midcap Fund
L&T Midcap Fund is a nearly 15-year-old fund which made its debut in August
2004. It is an ideal mid cap fund for long-term periods of at least 5 years wherein it
has given returns better than its benchmark. It follows an aggressive strategy in
allocation of its assets across both market capitalisations and sectors. This makes it
fit for investors who have a moderate to high risk appetite.
3. Invesco India Midcap Fund
Invesco India Midcap Fund has demonstrated an impressive performance track
record since its inception in April 2007. The scheme has succeeded in outperforming
its benchmark in all the three above-mentioned tenures – 1 year, 3 years as well as 5
years. It follows a relatively aggressive approach when it comes to the allocation of
its assets across market caps. However, the scheme has hedged off its aggressive
stance by following a relatively balanced approach in its asset allocation between
cyclical and defensive sectors. This style of asset allocation helps it in featuring a
moderately high risk level.
4. DSP Midcap Fund
DSP Midcap Fund is an established midcap fund which was launched in November
2006. The scheme has given attractive returns over the last 3 and 5 years. It is a
relatively conservative mid cap fund which has given a significant exposure to large
caps (13%) in its portfolio. As far as the scheme’s allocation of assets across sectors
is concerned, it is a little tilted towards the aggressive consumption-driven sectors to
which it has allocated nearly 60% of its assets. The considerable large cap inclusion
helps the scheme in yielding consistent and stable returns.
5. HDFC Midcap Opportunities Fund
HDFC Midcap Opportunities Fund is a high-returns generating mid cap fund which has
been in the space for nearly 12 years now. The scheme has beaten its benchmark by a
margin of nearly 2% during both the last 3 year and 5 year periods. It is a relatively
aggressive mid cap fund which holds just 3% of its assets in large caps. In sector-wise
allocation of its assets also, the scheme has adopted an aggressive stance as it has
invested a majority of its assets in consumption-driven sectors and not defensive
sectors.
 "A STUDY ON MARKET EVALUATION AND ITS IMPACT
ON PERFORMANCE OF MUTUAL FUNDS WITH
REFERENCE TO ADITYA BIRLA"

CHAPTER 2
RESEARCH DESIGN
Introduction
Mutual funds are investment products available to the investors through which they
can invest in an asset class of their choice such as equity, debt, gold etc. investor who
may not want to invest directly in financial markets may instead get exposure to the
same securities through a mutual fund. Similarly investors can diversify their
portfolio holdings even with small amounts by investing in gold and real estate
through mutual funds.

Each product offered by a mutual fund is called scheme or fund. A mutual fund may
offer multiple schemes or funds, each catering to a different investment need of the
investor.

Mutual funds have advantages and disadvantages compared to direct investing in

individual securities. the primary advantages of mutual funds are that they provide a
higher level of diversification, they provide liquidity and they are managed by the
professional investors.

When an investor subscribes to a mutual fund, he or she buys a part of the assets or
the pool of funds that are outstanding at that time. it is no different from buying
shares of a joint stock company. each share or unit that an investor holds needs to be
assigned a value. since the units held by investor evidence the ownership of the
assets, the value of the total assets of the of fund when divided by the total number of
units issued by the mutual fund gives us the value od one unit. this is generally called
the Net Asset Value (NAV) of one unit or one share. the value of an investors part
ownership is the determined by the NAV of the number of units held.

Seshadripuram First Grade College ,Yelahanka. Page

23
TITLE OF THE STUDY:
“A STUDY ON MARKET EVALUATION AND ITS IMPACT ON
PERFORMANCE OF MUTUAL FUNDS WITH REFERENCE TO ADITYA
BIRLA”.

STATEMENT OF PROBLEM:

The study under investigation here is related to analyzing the growth potential and
market evaluation. The investors are in a dilemma whether to go for the small, mid
or large cap funds. Therefore, this study focuses on the performance of the funds
and also the risk and returns involved in the fund. and it gives the idea to the
investors which funds are performing better and according to their risk and returns
the investors can park their investment in the fund which suits their investment
objective.

REVIEW OF LITERATURE:

Ms. K. Hemadivya (April 2012):

Has done a comparative study on evaluation of selected mutual funds in India.

Mutual funds industry has grown up by leaps and bounds, particularly during the
last 2 decades of the 20th century. Proper assessment of fund performance would
facilitate the peer comparison among investment managers; help average investor
successfully identify skilled managers to work hard to satisfy investors and
management. Therefore, regular performance evaluation of mutual funds is essential
for investors and fund managers also. the present study is confined to evaluate the
performance of mutual funds on the basis of yearly returns compared with BSE
Indices.
Dr. Sandeep Bansal, Deepak Garg and Sanjeev K Saini (2012):

Have studied Impact of Sharpe Ratio & Treynor’s Ratio on Selected Mutual Fund
Schemes. This paper examines the performance of selected mutual fund schemes,
that the risk profile of the aggregate mutual fund universe can be accurately
compared by a simple market index that offers comparative monthly liquidity,
returns, systematic & unsystematic risk and complete fund analysis by using the
special reference of Sharpe ratio and Treynor’s ratio

Prof. Kalpesh P Prajapati and Prof. Mahesh K Patel (Jul 2012):

Have done a Comparative Study On Performance Evaluation of Mutual Fund

Schemes of Indian Companies. In this paper the performance evaluation of Indian
mutual funds is carried out through relative performance index, risk-return analysis,
Treynor's ratio, Sharp's ratio, Sharp's measure, Jensen's measure, and Fama's
measure. The data used is daily closing NAVs. The source of data is website of
Association of Mutual Funds in India (AMFI). The study period is 1st January 2007
to 31st December, 2011. The results of performance measures suggest that most of
the mutual fund have given positive return during 2007 to 2011.

C.Srinivas Yadav and Hemanth N C (Feb 2014):

Have studied Performance of Selected Equity Growth Mutual Funds in India: An

Empirical Study during 1st June 2010 To 31st May 2013. The study evaluates
performance of selected growth equity funds in India, carried out using portfolio
performance evaluation techniques such as Sharpe and Treynor measure. S&P CNX
NIFTY has been taken as the benchmark. The study conducted with 15 equity
growth Schemes (NAV) were chosen from top 10 AMCs (based on AUM) for the
period 1st June 2010 to 31st may 2013(3years).
SaritaBahl and Meenakshi Rani, (Jul 2012):
Have done A Comparative Analysis of Mutual Fund Schemes in India. The present
paper investigates the performance of 29 open-ended Growth - oriented equity
schemes for the period from April 2005 to March 2011 (six years) of transition
economy. Monthly NAV of different schemes have been used to calculate the
returns from the fund schemes. BSE- Sensex has been used for market portfolio.
Historical performance of select schemes was evaluated on the basis of Sharpe,
Treynor and Jensen’s measure whose results will be useful for investors for taking
better investment decisions.

Dr. S.M. Tariq Zafar, Dr. D.S. Chaubey and Syed Imran Nawab Ali (Feb
2012):

Have done an Empirical Study on Indian Mutual Funds Equity Diversified Growth
Schemes and Their Performance Evaluation. This paper aims to know how the
performance of mutual funds is assessed and ranked after analyzing the NAV and
their respective returns so as to measure investment avenues. For the purpose
thirteen most preferred public and private sector equity diversified growth schemes
over a period of one year viz.2007-08 have been taken through judgment sampling
and Yield on 10 yr. govt. bond has been taken as the surrogate for the risk free rate
of return viz.7.56% p.a.
OBJECTIVE OF THE STUDY:

The study is carried out with the following objectives:

 To observe the overview of mutual fund industry in India.

 To understand the functioning of the mutual fund industry and its various
schemes.

 To ascertain which cap funds gives high returns with minimum risk.

 To analyse the comparative performance analysis of small, mid, and large cap
funds.

SCOPE FOR THE STUDY:

The study is limited to the small, mid and large cap mutual funds of Aditya Birla
mutual funds that is ABSL small cap fund (15days to 91days of period), ABSL mid
cap fund (period ranging less than a year), ABSL focused fund (term greater than
one year). The past 5 years data are being taken to carry on the project.
OPERATIONAL DEFINITIONS:

Standard deviation: The standard deviation measures the deviation

with relation to the average expected return of the fund. The standard
deviation measure the volatility of the fund. It is the square root of the
sum of the squared deviation of variable values from the mean divided
by the number of observation

NAV: NAV refers to the Net asset value represents funds per share
market value. It is derived by dividing the total value of all the cash and
securities in a fund's portfolio, less any liabilities, by the number of
shares outstanding. An NAV computation is undertaken once at the end
of each trading day based on closing market prices of portfolio
securities.

Returns: Returns refer as increase in the value of NAV of mutual fund

scheme over a period of time that is additional income fund generated to
the investors from the date of investment.

Portfolio: Portfolio refers to the group of securities in the particular

fund. It is a combination of securities from different sector. where the
fund manager is going to invest in the diversified securities to generate
returns to a mutual fund scheme.
Sharpe ratio: Sharpe ratio is the measure of risk adjusted return of a portfolio. A
portfolio with the highest Sharpe ratio is considered as the best portfolio.
Sharpe ratio of portfolio <1 is considered bad investment, 1-1.99 is considered as
good, 2-3 is considered as very good and above >3 is considered as the excellent
investment.
Formula for the Sharpe ratio:
R(p) – R(f) / S(p)
R(p): It refers to the total returns generated by the portfolio in the specific period of
time. It is calculated by taking the current year value – base year value / by base
year value multiplied with 100.
R(f): R(f) refers to the risk free returns earned through a government security.
Which might be Treasury bill rate, G-sec bond rate etc.

RESEARCH METHODOLOGY:

Research methodology is a systematic way of studying a problem and finding the solutions for the
problem.

This research is a Descriptive type of research.

Data source Primary data source: Records maintained by the organization,

interaction with the employees.

Secondary data: Books, Annual reports, Internet, and Articles.

Area of study
Aditya Birla Capital(Aditya Birla Sun Life Asset Management
Company Pvt.Ltd, Bengaluru)

Data analysis Graphs, Tables, Questionnaire, Statements of the Organization.

tools

LIMITATION OF THE STUDY:

The study requires a huge time to collect the information about the small, mid and
large cap fund. The data collected is limited to the Aditya Birla mutual fund that is
ABSL small cap fund, ABSL mid cap fund and ABSL frontline equity fund.
PLAN OF ANALYSIS:

The plan analysis is done using the data collected by the Aditya Birla mutual fund
NAV values through the secondary data. The data collected is been analyzed using
the returns percentage and the Sharpe ratio and standard deviation of the portfolio.

CHAPTER SCHEME:

Chapter 01: Introduction:

Introduction, meaning , Definition, Features, and importance

Chapter 02: Research design;

The design consists of the title of the study, review of literature, need of the study,
statement of problem, objectives of the study, scope of the study, limitations of the
study, and plan of analysis.
Chapter 03: company profile:

The chapter includes the detail information of the companies mission, vision and
operations of the company, history of the company and their organizational
structure.
Chapter 04: Data analysis and interpretation

It deals with analysing and interpreting the results of the data collected into a
meaningful sense upon which statistical and financial tools are used to analyse the
outcome of the result.

Chapter 05: Finding, conclusion and suggestion:

The summary of findings, suggestions and the conclusion of the study conducted
will be stated and the recommendations are drawn.
 "A STUDY ON MARKET EVALUATION AND ITS
IMPACT ON PERFORMANCE OF MUTUAL FUNDS
WITH REFERENCE TO ADITYA BIRLA"

CHAPTER 3

COMPANY PROFILE

Image 3.1 showing the logo of Aditya Birla capital

Name of the company:

ADITYA BIRLA SUN LIFE MUTUAL FUND

Overview of ABSL mutual funds:

Established in 1994, Aditya Birla Sun Life Mutual Fund (ABSLMF), is co-
sponsored by Aditya Birla Capital Limited (ABCL) and Sun Life (India)
AMC Investments Inc.

Having total domestic assets under management (AUM) of close to Rs.2423

billion for the quarter ended December 31st, 2018, ABSLMF is one of the
leading Fund Houses in India based on domestic average AUM as published
by the Association of Mutual Funds of India (AMFI). ABSLMF has an
impressive mix of reach, a wide range of product offerings across equity,
debt, balanced as well as structured asset classes and sound investment
performance, and around 6.8 million investor folios as of December 31st,
2018.

SESHADRIPURAM FIRST GRADE COLLEGE, YELAHANKA. Page 32

Company Information: Aditya Birla Sun Life AMC Limited (formerly
known as Birla Sun Life Asset Management Company Limited, Investment
Manager for Aditya Birla Sun Life Mutual Fund) One India Bulls Centre,
Tower 1, 17th Floor, Jupiter Mill Compound, 841, S.B. Marg, Elphinstone
Road, Mumbai - 400 013. Tel.: 4356 8000. Website:
www.adityabirlacapital.com. CIN: U65991MH1994PLC080811

Aditya Birla Capital Limited (ABCL), is the financial services platform of

the Aditya Birla Group. With a strong presence across the life insurance,
asset management, private equity, corporate lending, structured finance,
project finance, general insurance broking, wealth management, equity,
currency and commodity broking, online personal finance management,
housing finance, pension fund management and health insurance business,
ABCL is committed to serving the end-to-end financial services needs of its
retail and corporate customers. Anchored by more than 17,000 employees,
ABCL has a nationwide reach and more than 2,00,000 agents / channel
partners.

History of Aditya Birla:

Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment
managers of Birla Sun Life Mutual Fund, is a joint venture between the
Aditya Birla Group and the Sun Life Financial services Inc. of Canada. The
joint venture brings together the Aditya Birla Group’s experience in the
Indian market and Sun Life’s global experience.

Established in 1994, Birla Sun Life Mutual fund has emerged as one of
India’s largest flagships of Mutual Funds business managing assets of a large
investor base. Our solutions offer a range of investment options, including
diversified and sector specific.
 Brief background of the company:

Birla Sun Life Mutual Fund is a Trust with the Sponsors being Aditya Birla
Financial Services Limited (wholly owned subsidiary of Aditya Birla Ltd.)
and Sun Life (India) AMC Investments Inc. It was set up on December 16,
1994 with Birla Sun Life Trustee Company Pvt. Ltd. (the Trustee Company)
as a Trustee in accordance with the provisions of the Indian Trusts Act, 1882
and is duly registered under the Indian Registration Act, 1908. The Trustee
has entered into an Investment Management Agreement dated December 16,
1994 with Birla Sun Life Asset Management Company Ltd. (the AMC) to
function as the Investment Manager for all the Schemes of the Fund. Birla
Sun Life Mutual Fund was registered with SEBI on December 23, 1994
under Registration Code MF/020/94/8.

Sponsors
The Aditya Birla Group

A US $41 billion (Rs. 2,50,000 crore) corporation, the Aditya Birla Group is
in the League of Fortune 500. Anchored by an extraordinary force of over
120,000 employees, belonging to 42 nationalities. Over 50 per cent of its
revenues flow from its overseas operations spanning 36 countries.
The Aditya Birla Group has been ranked fourth in the world and first in Asia
Pacific in the ‘Top Companies for Leaders’ study 2011, conducted by Aon
Hewitt, Fortune Magazine and RBL (a strategic HR and leadership Advisory
firm). The Group has topped the Nielsen's Corporate Image Monitor 2014-15
and emerged as the Number one corporate, the 'Best in Class', for the third
consecutive year.
 Sun Life Financial Inc.
Sun Life Financial Inc. is a leading international financial services
organization providing a diverse range of wealth accumulation and protection
products and services to individuals and corporate customers. Chartered in
1865, Sun Life Financial and its partners today have operations in key
markets worldwide, including Canada, United States, United Kingdom,
Ireland, Hong Kong, Philippines, Japan, Indonesia, India, China, Australia,
Singapore, Vietnam, Malaysia and Bermuda. As of December 31, 20165 the
Sun Life Financial Inc. had total assets under management to the tune of C$
903891.3 billion.

Trustee of the company:

Birla Sun Life Trustee Company Pvt. Ltd.is the exclusive owner of the Trust
Fund and holds the same in trust for the benefit of the unit holders. The
Trustee has been discharging its duties and carrying out the responsibilities
as provided in the Regulations and the Trust Deed. The Trustee seeks to
ensure that the Fund and the Schemes floated there under are managed by
the AMC in accordance with the Trust Deed, the Regulations, directions and
guidelines issued by the SEBI, the Stock Exchanges, the Association of
Mutual Funds in India and other regulatory authority.
The most important responsibility of the Trustee is to safeguard the interests
of the Unit holders which is done by ensuring that the activities of the Fund
are managed by Birla Sun Life AMC (Investment Manager) in compliance
with the SEBI (Mutual Funds) Regulations, 1996 as amended from time to
time read with the Investment Management Agreement and Trust Deed. On
the basis of the information provided and reviews undertaken, the Trustees
hereby note that Birla Sun Life AMC has operated in the interests of the Unit
holders.
 Asset management company:
Birla Sun Life Asset Management Company Ltd (BSLAMC) is a joint
venture between the Aditya Birla Financial Services Limited, a wholly
owned subsidiary of Aditya Birla Nuvo Ltd., and a part of the Aditya Birla
Group, and Sun Life (India) AMC Investments Inc. (a company governed by
the laws of Canada), a wholly-owned subsidiary of Sun Life Financial Inc,
Canada. BSLAMC is also the Investment Manager for the schemes of Birla
Sun Life Mutual Fund. Further, BSLAMC acts as investment advisor to two
offshore funds, namely, India Advantage (Offshore) Fund and India Excel
(Offshore) Fund. BSLAMC is also appointed as Investment Manager to the
Venture Capital Fund – ‘Aditya Birla Real Estate Fund’, (Registration No.
IN/VCF/09-10/169 dated February 26, 2010) registered with SEBI under
SEBI (Venture Capital Funds) Regulations, 1996. BSLAMC has also setup
two wholly owned subsidiaries, namely Aditya Birla Sun Life Asset
Management Company Pte Ltd., incorporated in the Republic of Singapore
under the Companies Act, Cap. 50, and namely Aditya Birla Asset
Management Company Ltd., incorporated in Dubai under the Companies
Law, DIFC Law no. 2 of 2009, for undertaking Fund Management /
Investment advisory / Distribution of financial products or any such
permissible activity subject to SEBI (Mutual Funds) Regulations.

The AMC also acts as the Investment Manager for Aditya Birla Real Estate
Debt Fund, which is formed as a trust and has received registration as a
Category II Alternative Investment Fund from SEBI vide Registration No.
IN/AIF2/15-16/0200. Further, the Company has also received SEBI
registration for Alternative Investment Fund (AIFs) Category III namely
‘Aditya Birla Sun Life AIF Trust – I’ under registration code IN/AIF3/17-
18/0319 dated April 11, 2017. These activities are being undertaken in
compliance with the provisions of Regulation 24(b) of SEBI (Mutual Funds)
Regulations and such other applicable regulations and there is no conflict of
interest.
BSLAMC has also obtained a Certificate of Registration [Code No:
PM/INP000000597] to undertake the business of offering Portfolio
Management Services (PMS) to Clients / Investors.

Name of Shareholders Percentage ownership held by the

shareholder
Aditya Birla Capital Ltd* & others 51.00%
Sun Life (India) AMC Investment Inc 49.00%

Total 100%

Table 3.1 showing the percentage holdings of share holders

Recognitions:

The Schemes of Birla Sun Life Mutual Funds continued to deliver superior
performance across various fund categories throughout the year.

The Fund House, the schemes of Birla Sun Life Mutual Fund and the Fund
Managers of Birla Sun Life Asset Management Company Limited
(BSLAMC) received various awards and recognition during the year under
review of which the following are noteworthy:

➢ Asia Asset Management 2016 Awards

1. CIO of the Year, Equity - Mahesh Patil

2. CIO of the Year, Fixed Income - Maneesh Dangi

3. Best Investor Education - Birla Sun Life Asset

Management Company Limited

➢ Outlook Money Awards 2016:

1. Runner Up Equity AMC of the year- Birla Sun Life Asset

Management Company Limited

2. Most Innovative Approach to Investor Awareness - Birla Sun Life

Asset Management Company Limited
➢ 2017 Morning India Awards

1. BSL Short Term Fund in Short- Term Bond Category

➢ 2016 Thomson Reuters Lipper Fund Awards

1. Best Fund 3 and 5 Years - Bond Indian Rupee - Birla Sun Life
Treasury Optimizer-Retail-Growth

2. Best Fund 3 and 5 Years - Bond Indian Rupee - Birla Sun Life Gilt
Plus-PF-Growth

3. Best Fund 10 Years - Bond Indian Rupee - Birla Sun Life Dynamic
Bond-Retail-Growth

4. Best Fund 3 and 5 Years - Equity India Rupee - Birla Sun Life MNC
Fund-Growth

5. Best Fund 10 Years - Equity India Rupee - Birla Sun Life Frontline
Equity Fund-Growth

6. Best Fund 3 and 5 Years - Mixed Asset Conservative - Birla Sun Life
MIP II-Wealth 25-Growth

7. Best Fund 10 Years - Mixed Asset Conservative - Birla Sun Life

Monthly Income-Growth.
 Missions and vissions:
“To be a leader and role model in a broad—based and integrated
financial services business”

The 4 Pillars of Vision which helps them to achieve are:

 To be a leader- They are committed to being a leader in all facets of

their businesses, rather than being just another participant in the race.
 To be a role model- They will not become leaders by cutting corners or
making compromises. Whatever they do. they still strive to be the best in
class and if they are the best, then their customer will have no reason to
go elsewhere- therefore their leadership is assured, on pure merit.
 To be a broad –based player- They are committed to meeting all the
felt and unfelt needs of their target customer, and thereby, they can retain
him or her across their needs and life- stages.
 They aim to be Integrated player- We believe that this approach gives
them a competitive edge through sharing of best practices, deriving
across-business synergies & providing talent pool with world of
opportunity to grow

Their customers place a lot of trust when they choose them as their partner
for fulfillment of their dreams- be it buying a dream home or investing their
hard earned money in mutual funds or meeting their retirement or child’s
education or protection needs or taking a business loan for expansion. At
Aditya Birla capital, our endeavor is to become a preferred financial services
brand that customers will not only just trust but also happily endorse.
Keeping this customer insight in mind, we have created a unique strategy &
structure to present our spectrum of businesses and offerings under one
virtual brand. From their employees, they offer a world of growth
opportunities across all their financial services offerings. And to their
shareholders, this gives the reassurance that they will attract and retain their
customers, cost effectively, across their life-cycle needs.
 Products offered at Aditya birla mutual funds:

Open ended scheme

Funds under saving solutions:

 Aditya Birla Sun Life Liquid Fund

 Aditya Birla Sun Life Money Manager Fund
 Aditya Birla Sun Life Low duration fund
 Aditya Birla Sun Life savings fund
 Aditya Birla Sun Life Floating rate fund
 Aditya Birla Sun Life Arbitrage fund
 Aditya Birla Sun Life Corporate bond Fund
 Aditya Birla Sun Life short term opportunities fund
 Aditya Birla Sun Life Banking and PSU debt fund
 Aditya Birla Sun Life Medium term plan
 Aditya Birla Sun Life Credit risk fund
 Aditya Birla Sun Life Dynamic Bond Fund
 Aditya Birla Sun Life Income Fund

Funds under Regular Income Solutions:

 Aditya Birla Sun Life Regular Savings Fund

Funds under Tax Savings Solutions:

 Aditya Birla Sun Life Tax Relief ‘96

 Aditya Birla Sun Life Tax Plan

Funds under Wealth Solutions:

 Aditya Birla Sun Life Equity Savings fund

 Aditya Birla Sun Life Balanced Advantage Fund
 Aditya Birla Sun Life Equity Hybrid ’95 Fund
 Aditya Birla Sun Life Index Fund
 Aditya Birla Sun Life Frontline Equity Fund
 Aditya Birla Sun Life Focused Equity Fund
 Aditya Birla Sun Life Equity Fund
 Aditya Birla Sun Life Equity Advantage Fund
 Aditya Birla Sun Life MNC Fund
 Aditya Birla Sun Life Midcap Fund
 Aditya Birla Sun Life Smallcap Fund
 Aditya Birla Sun Life Pure value fund
 Aditya Birla Sun Life Manufacturing Equity Fund
 Aditya Birla Sun Life Banking and Financial services fund
 Aditya Birla Sun Life Dividend Yield Fund
 Aditya Birla Sun Life Infrastructure Fund
 Aditya Birla Sun Life Digital India Fund
 Aditya Birla Sun Life India GenNext Fund

Close ended schemes:

Aditya Birla Sun Life Capital protection Oriented Fund – series 22 – Regular Plan

 Aditya Birla Sun Life Capital protection Oriented Fund- series 29- Regular
Plan
 Aditya Birla Sun Life Capital protection Oriented Fund- Series 30- Regular
Plan
 Aditya Birla Sun Life Emerging Leaders Fund – Series 3 – Regular plan –
Growth
 Aditya Birla Sun Life Emerging Leaders Fund – Series 4 – Regular plan -
Growth
 Aditya Birla Sun Life Emerging Leaders Fund – Series 7 – Regular plan –
Growth
Value added products:

 SIP: Systematic Investment Plan- Available online & offline for all
investors to minimize market volatility and enable long term savings.
 STP: Systematic transfer plan allows investors to diversify and save in
both asset classes by transferring a fixed amount from one scheme and
invest in another scheme.
 SWP: Systematic withdrawal plan allows investors to withdraw a fixed
amount of money from their corpus to build sustainable income streams
while saving on tax also.
 CSIP: Century SIP is an SIP to enable your long term wealth creation
in specified schemes while providing free Life insurance of up to 50
Lacs
 SWF: Smart Withdrawal Facility offers fixed and variable payment
options to allow investor to receive income @8% p.a. at fixed intervals
or equivalent to dividend payment in the fund respectively. This helps in
building regular cash flows, tax efficiency, No TDS and no exit load
impact.
 CATP: Capital Appreciation Transfer Plan allows investors to preserve
their capital and transfer only capital appreciation to another asset class/
scheme at regular intervals.

 SPPF: Smart Premium Facility allows common customers of Aditya

Birla Sun Life Insurance (ABSLI) and Aditya Birla Sun Life AMC ltd.
(ABSLAMC) to provide long term savings while their insurance
premium in Aditya Birla Sun Life Insurance (ABSLI) to be paid directly
out of this corpus without any associated cost.
 Key personnel:
Table showing the key personnels

Name / Designation Age Educational Business Experience

Qualifications

Mr. A. Balasubramanian 51 B.Sc Overall experience of over 26 years in the

(Mathematics), Mutual Fund Industry. Working with
Chief Executive Officer yrs
Diploma in ABSLAMC since inception. Previously
(CEO)
Financial worked with GIC Mutual Fund
Management,
AMP from IIM,
Bangalore

Ms. Keerti Gupta 47
Chief Operations Officer yrs
(COO) & Investor
Relations Officer
B.Sc., M.B.A. Over 22 years of experience in Aditya Birla
Financial Services Group in the areas of
Risk, Compliance, Investment and Sales.
Prior to joining ABSLAMC, she was working
with Birla Sun Life Insurance Company
Limited as Head - Risk.

Ms. Hemanti Wadhwa 42 M.Com, LLB (Gen), She has over 18 years of experience in the
Head – Legal, Compliance FCS areas of Compliance, Legal, Audit and
& Secretarial yrs
Secretarial. Prior to joining ABSLAMC, she
was working with IL&FS Infra

Asset Management Limited as Chief

Compliance Officer and Company
Secretary.
Ms. Molly Kapoor 41 M.A. (Economics), She has over 18 yrs of work experience in
PGDBM – NMIMS, Service & Operations. Out of which 11 yrs
Head – Marketing yrs
Mumbai in MF industry. Prior to joining ABSLAMC,
was at ICICI Prudential AMC as AVP-
Customer Service.

Mr. Parag Joglekar 44 B. Com, ACA and Has over 19 years of experience. He has
Grad CWA been promoted from position of Finance
Chief Financial Officer yrs
Controller and has held various positions in
(CFO)
Finance functions of ABSLAMC. Prior to
joining ABSLAMC, has worked with
Strategic Capital Corporation Limited as
Head – Financial Administration.
Mr. Anil Shyam 42 B.Com, Master in He has over 16 years of experience and has
Finance and been associated with ABSLAMC for more
Co-Head- Retail Sales yrs
Control and BJMC. than 5 years. Prior to joining ABSLAMC, he
was associated with various AMCs (J.M
Financial, ICICI, Cholamandalam) in
Institutional Sales function. He has also
worked with the A. K Capital Services Pvt.
Ltd.

Mr. Sidharth Damani 43 B.Com, MBA in He has an overall experience of 18 years in

International Retail Sales and is associated with
Co-Head: Retail Sales and yrs
Finance ABSLAMC from August 2003. He has been
Distribution
[Queensland promoted from position of Zonal Head
University of Retail Sales (West) and has held various
Technology, positions in Retail Sales function with
Brisbane, ABSLAMC.
Australia]

Details of the fund management team:

Name Age Portfoli Educational Experience

o Qualifications
Mr. Mahesh 48 Co- B.E.(Electrical Over 26 years experience in fund
Patil yrs Chief ), management, equity research and
Invest MMS(JBIMS), corporate finance. Prior to joining
ment CFA (ICFAI) ABSLAMC, he has worked with
Officer Reliance Infocom Ltd. in Business
Strategy, and as a Sr. Research
Analyst with Motilal Oswal
Securities and Parag Parikh
Financial Advisory Services
Mr. Maneesh 40 Co- MBA, FRM Over 17 years of experience in
Dangi yrs Chief Finance & Research. Prior to this,
Invest worked with Pioneer Investcorp.
ment
Officer
Mr. Satyabrata 46 He B.Com, C.A., Over 18 years of experience in
Mohanty yrs ad CFA Finance and Research. Previously
– worked in Aditya Birla
Mix Management Corporation Ltd.
ed
Ass
ets
Mr. Ajay Garg 47 Fund B.E. Working with the AMC since Jan,
yrs Manager (Electronics 2003. Prior to this worked with
), MBA Birla Sun Life Securities Ltd. Total
(Finance) Work Experience of 24 years in
 financial services.

Mr. Anil Shah 51 Fund B.Com, He has over 28 years of

yrs Manager C.A, Cost experience in equity research and
Accountant. investments. Prior to joining AMC,
he has worked with RBS Equities
(India) Ltd. (formerly known as
ABN AMRO Asia Equities (India)
Ltd.) for around 15 years.
Mr. Vineet 35 Fund B.Com., C.A. Has around 13 years of
Maloo yrs Manager experience. He had been providing
analytical support to the Chief
Financial Officer of Hindalco
Industries Limited, prior to which
he has worked with Aditya Birla
Management Corporation Ltd. &
M/s. D. K. Chhajer & Co.,
Chartered Accountants.
Ms. 35 Fund B.Com, MBA She has over 13 years of
Sunaina yrs Manager (FMS, Delhi), experience in credit evaluation and
da Cunha CFA research. Prior to joining
ABSLAMC, she worked with Aditya
Birla

Table showing the fund management team

 Mr. Kaustubh 34 Fund CA, B.Com. He has over 11 years of
Gupta yrs Manager experience. Prior to joining
ABSLAMC, he has worked with
ICICI Bank Limited where he was a
Money Market Manager managing
liquidity.
Mr. Milind Bafna 38 Fund BE (Chem.) Overall experience of around 17
yrs Manager years. Prior to joining ABSLAMC,
he has worked with Motilal Oswal
Financial Services and Reliance
Industries Limited.
Mr. Kunal 34 Fund C.A., B.Com He has overall experience of
Sangoi yrs Manager around 10 years in the Financial
markets. Prior to joining ABSLAMC,
he has worked with Edelweiss
Financial Services Limited.
Mr. Shravan 38 Fund PGPM - ISB, He has an overall experience of 16
Sreenivasula yrs Manager Hyderab years of which 8 are in financial
ad and markets. Prior to joining ABSLAMC,
B. Tech he was the Fund Manager of Multi-
(Hons) - Manager funds at ING Investment
IIT, Management since April 2008.
Kharagpur Before that he worked at Network
Eighteen Ltd., Capgemini India Pvt.
Ltd.
And Infosys Technologies Ltd.
Mr. Jayesh 48 Fund C.A., C.F.A., He has an overall experience of
Gandhi yrs Manager Master of over 17 years in investment
Internatio management and equityresearch.
nal Prior to joining ABSLAMC, he was
Managem a Portfolio Manager at Morgan
Stanley Investment Management
ent
Private Limited since August
2007.
Mr. Lovelish 31 Fund MMS (Finance), He has an overall experience of
Solanki yrs Manager BMS (Finance) over 9 years in Trading and
Dealing. Prior to joining Birla Sun
Life AMC, he was Equity /Equity
Derivatives - Trader at Union
KBC Asset Management Co
Limited since February 2011.
Before that he
worked at Edelweiss Asset
Management Co. Ltd since January
2008.
Mr. Chanchal 37 Fund B.Com (H) – Shri He has an overall experience of
Khandelwal yrs Manager Ram College around 11 years of which 8 years is
of in financial markets with
Commerce (Delhi); ABSLAMC. Prior to joining
MBA – Finance, ABSLAMC, he has worked with
Xavier Institute of Aditya Birla Retail Limited
Management, (February 2007 - May 2008) and
Bhubaneshwar Aditya Birla Management
Corporation Ltd.
 Research team

Name Qualification Designation

Ms. Sunaina Da Cunha B.Com, MBA (FMS, Delhi), CFA Fund Manager / Analyst (Fixed
Income)
Ms. Achala Kanitkar B.Com , MMS (Finance) Analyst (Equity)

Mr. Chanchal B.Com(H) SRCC, MBA (XIMB) Analyst (Equity)

Khandelwal
Mr. Milind Bafna BE (Chem.) Fund Manager / Sr. Analyst
(Equity)
Mr. Dhaval Gala PGDBM (Finance), BMS Analyst (Equity)

Mr. Jaspreet Singh CFA Sr. Analyst (Fixed Income)

Mr. Vishwesh Mehta B.Com, CA, Ph. D Analyst (Equity)

Mr. Kunal Sangoi C.A., B.Com Fund Manager / Sr. Analyst

(Equity)
Mr. Ashish Kela B.Tech Fund Manager/ Analyst (Fixed
Income)
Ms. Aastha Gudwani Economics (H), University of Analyst (Fixed Income)
Delhi, M.A. (Economics), JNU,
New Delhi

Ms. Bhavna Mohan B.E. (Computer Science), Senior Analyst (Fixed Income)
Post Graduate Program in
Management (Analytical Finance;
IT & Operations)

Mr. Subir Sen Master of International Senior Analyst (Fixed Income)

Business, Indian Institute of
Foreign Trade (IIFT), New Delhi,
B.E., National Institute of
Technology

Mr. Prathmesh Oke M. Com, CA. Analyst (Fixed Income)

Table showing research team

"A STUDY ON MARKET EVALUATION AND ITS IMPACT
ON PERFORMANCE OF MUTUAL FUNDS WITH
REFERENCE TO ADITYA BIRLA"

Dealer team

Name Qualification Designation

Mr. Sujit Patki DBM, MCS Dealer
Mr. Girish Patil B.E. (Production), MBA Senior Dealer
(Finance)

3.4 Table showing dealer team

SESHADRIPURAM FIRST GRADE COLLEGE, YELAHANKA. Page 50

 CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

From the secondary data collected, following are the data analysis and
interpretation:

4.1 Objective 4:

To make a comparative performance analysis of small, mid and large cap

funds.

Small cap, mid cap, large cap analysis using BSE 200 as the benchmark

1. 2015-16

2015-16 SMALL MID CAP LARGE BSE 200

CAP RETURNS CAP RETURNS
RETURNS RETURNS
APRIL 8% 7% 5% 5%
MAY 9% 8% 6% 6%
JUNE 12% 14% 9% 8%
JULY 4% 3% 2% 2%
AUG -2% 0% 1% 1%
SEPT 8% 7% 4% 4%
OCT 0% 0% -1% -1%
NOV 6% 7% 7% 6%
DEC 3% 4% 0% -1%
JAN 5% 5% 3% 3%
FEB 1% 1% 3% 3%
MARCH 0% 2% 0% 0%

4.1 Table showing the return percentage of 2015-16

ANALYSIS: The table shows the returns yielded by small, mid and large
cap funds in the year 2015-16. The small cap fund has the highest return of
12% and is outperforming the benchmark which has the highest return of 8%.
The mid cap has the positive returns throughout the year with the highest
return of 14% which is more than small cap comparatively. And the large cap
has positive returns but its returns are not more than small and mid cap. Both
the large and benchmark are giving same rate of returns at 8%. The small,
mid and large cap fund has the objective of wealth creation. The portfolios of
small, mid and large cap funds are diversified to the various sectors but the
maximum of the holdings is in finance sector with the 30% approximately,
16.5% in FMCG, and 12% in the IT sector.

The mid cap is generating the highest return in the year with the 14% which
is 6% more than the benchmark compared and the least is large cap funds
with the return of 8%.
 16%
14%
12%
10%
8%
6%
4% SMALL CAP
MID CAP LARGE CAP
BSE 200

2%
0%

12345678910111213
-2%

-4%

Graph showing the returns of small, mid and large cap funds of 2015-16

INTERPRETATION: The performance of the fund in this year is been

moderately high with the mid cap being the highest return percentage of 14%
and small cap at 8% it is been measured with BSE 200 which has given 8%
return in the year 2015-16. The return on investment for the small cap is at
58%, mid cap 64% and the large cap at 43% and the BSE 200 with the return
on investment of 33%. The sensex had surged up by 30% in the year 2014
which is highest since 2009. Due to the new NDA government in India
market had rallied to the highest basis points in the year. And this had an
impact on mutual fund industry as well.
2016-17

2016-17 Small cap mid cap large cap BSE 200

returns returns returns returns
APRIL 1% 1% -1% -1%
MAY -2% -2% -2% -2%
JUNE -1% 0% 0% -1%
JULY 6% 6% 4% 4%
AUG 1% 1% -1% -1%
SEP -4% -6% -6% -6%
OCT 4% 4% 4% 4%
NOV -1% -2% -3% -3%
DEC 2% 1% -1% -1%
JAN -2% -3% -3% -3%
FEB -7% -7% -4% -5%
MARCH 3% 3% 5% 5%

Table showing the returns of small, mid and large cap funds of 2016-17

ANALYSIS: The above table shows the returns of small, mid and large cap
funds. The small cap, mid and large cap started the chart with increasing note
from the previous year. And from there on the market value for the funds are
diminishing constantly and ended the year with 23.20, 201.50 and 153
respectively. Which is giving the negative returns in the end of the year? The
highest traded value of small, mid and large cap funds are 25.10, 166.48 and
3559 respectively and the lowest is being 22.80, 195.46, and 3037.35.
 8%
6%

4%

2%
SMALL CAP
MID CAP LARGE CAP
0%
1 2 3 4 5 6 7 8 9 10 11 12 BSE 200
-2%

-4%
-6%
-8%

-10%

Graph showing returns from small, mid and large cap funds of 2016- 17

INTERPRETATION: The above chart shows that the 3 funds are

performing negatively in the year 2016-17. The fund's performance is
unfavorable with the return on investment being in the reverse or downward
in the chart. The highest returns in the month are 6%, 4% and 5%
respectively with the benchmark returns being the same position of 5%. And
the least is being -7%, -7% and –6% respectively. The reason for the
downfall of the fund's performance in the year 2015-16 is due to the increase
of the G-sec bond rates which had increase from 7-6% to 9% approximately.
The investors would obviously choose for the investment product which
gives them the high returns with the no risk. This would be the reason for a
sudden shift from mutual fund investment to investing in bonds. And also a
downward trend in the NAV performance.
2017-18:

2017-18 SMALL CAP MID CAP LARGE CAP BSE 200

RETURNS RETURNS RETURNS RETURNS
APRIL 7% 5% 4% 4%
MAY 2% 2% 1% 1%
JUNE 5% 3% 4% 4%
JULY 5% 6% 5% 5%
AUGUST 5% 4% 3% 2%
SEPT 3% 3% 2% 2%
OCT 3% 3% 0% 0%
NOV -7% -6% -5% -5%
DEC -4% -4% -3% -2%
JAN 5% 3% 4% 4%
FEB 7% 6% 5% 6%
MARCH 3% 2% 2% 3%

Table showing percentage returns of small, mid and large cap funds
of 2017-18

ANALYSIS: After the negative returns in the year 2016-17 the funds opened
with positive or favorable returns in the year 2017-18.The small cap, mid cap,
large had a average of 25.15, 212.47, 158.50 in the opening month of 1 st
quarter and the funds started booming upwards without a downward trend till
September. The highest being 33.17 for small cap, 265.57 for mid cap,
189.21 for large cap in the end of the 4th quarter. And even the benchmark
had also increased up to 3922 from 3290. The funds have performed better
and giving better returns than the benchmark.
 8%

6%

4%
SMALL CAP
2% MID CAP
0%
123456789101112 LARGE CAP
-2% BSE 200

-4%

-6%

-8%

Graph showing the returns of small, mid and large cap funds of 2017-18

INTERPRETATION: The above chart shows the performance of the small,

mid and large cap funds. The highest return on investment is provided by
small cap fund with the return percentage of 32%, mid cap is providing 25%,
large cap and benchmark are providing the return of 19%. The small and mid
cap have outperformed the benchmark. But during the 3 rd quarter there is a
huge decline in all the three funds going up to negative return of 7%. The
main reason being the demonetization in India the sensex and the investment
had gone down drastically. By the end of the financial year the funds are in
the stable position and providing the highest return in the end of the 4 th
quarter.
2018-19

2018-19 small cap mid cap large bse 200

returns returns cap returns
APRIL 9% 7% 3% 3%
MAY 2% 2% 2% 2%
JUNE 0% 1% 2% 1%
JULY 2% 2% 3% 3%
AUG -2% 0% 1% 1%
SEPT 4% 3% 1% 1%
OCT 5% 2% 1% 2%
NOV 4% 2% 2% 2%
DEC 3% 2% 0% 1%
JAN 4% 3% 4% 4%
FEB -7% -6% -4% -3%
MARCH -3% -3% -3% -3%

table showing percentage returns of small, mid and large cap funds 2018-19

ANALYSIS: In the year 2018-19 the funds gave constant return. The highest
NAV was 44.86 in January for small cap, 336.53 is the highest for mid cap,
225.46 is the highest for large cap. The benchmark is also performing in the
favourable direction by giving the constant increase in the value. The least
NAV value for the year for small, mid and large are 36.22, 284.46, 194.62
which is in the beginning of the 1st quarter and benchmark has also has the
least price in the April at 4030
 10%
8%

6%

4% SMALL CAP
2% MID CAP LARG CAP
BSE 200
0%
123456789101112
-2%

-4%
-6%

-8%

Graph showing returns of small, mid and large cap funds of 2018-19

INTERPRETATION: The funds have performed in the positive direction in the chart
till the 3rd quarter. The main reason behind the downfall in the returns of the funds and
BSE are the union budget. And the market crash and the rupee had touched record low
of 74.48 which was giving the indication of further falling up to 80 rupees. The return
on investment for the period was 12% for the small cap, 8% for both mid and large cap
funds. The BSE 200 gave the return of 11%. which means the mid cap and large cap are
under performing, And even the small cap is equally performing as benchmark
 2019-20:

2019-20 SMALL MID CAP LARGE BSE 200

CAP RETURNS CAP RETURNS
RETURNS RETURNS
APRIL 3% 3% 2% 3%
MAY -1% -1% 0% 1%
JUNE -5% -3% 0% 0%
JULY -4% -2% 1% 1%
AUG 2% 4% 5% 5%
SEPT 0% -4% -2% -2%
OCT -16% -10% -8% -9%
NOV 3% 4% 3% 3%
DEC 0% 1% 1% 1%
JAN 0% -1% 0% 0%
FEB -7% -5% -2% -1%
MARCH 11% 8% 5% 5%

table showing percentage returns of small, mid and large cap funds 2019-20

ANALYSIS: The market value for the funds has the constant negative returns
in the year 2019-20. The least value for the funds is 31.22, 263.56, and
204.75. The highest is at the beginning of the 1st quarter of the month at
41.75, 316.12, and 215.84. The Benchmark performance is also diminishing
and has least market value at 4415.06 in the month of October and highest at
4942 in the month of august.
 15%

10%

5% SMALL CAP
MID CAP LARGE CAP
0% 123456789101112 BSE 200
-5%

-10%

-15%

-20%

4.5 Graph showing the returns of small, mid and large cap funds of
2019-20

INTERPRETATION: The negative returns in the year 2019-20 are the least
returns generated by small cap funds in the past 5 years. The return on
investment for the year 2019-20 is -17% for small cap, -10% for mid cap
funds, and 2% favourable returns for the large cap funds.

The benchmark has the favourable returns than any of the funds in the year
2019-20. The return on investment for BSE 200 is around 4%. Where only
large cap funds are giving the favourable returns. The main reason was the
downfall of the Sensex where Rs .63 lakh crore investor wealth was wiped
out, all the sectoral indices on nifty ended the day in the red.
 4.2 Objective: 3

To find out which fund gives highest returns with the moderate risk:

1. 2015-16

sectors Average Total return standard deviation

Small cap 20.47 58% 3.23

mid cap 177.36 64% 26.57

large cap 146.33 42% 15.74

Table showing the average and standard deviation of the funds of 2015-16

ANALYSIS:

 The average return expected in small cap fund is 20.47 in 2015-16. The deviation
from the average is 15.57% and the small cap has gained a total return on
investment of 58% in the year 2014-15.
 The average return expected in mid cap fund is 177.36 in the year 2015-
16. The deviation from the average is 14.9% and mid cap is giving the
highest return of 64%. When compared between the other sectors.
 The average expected return in large cap fund is 15.74 with the deviation of
10.75% and the large cap is giving the least returns of all the sectors
 The risk factor or the volatile of both small and mid cap funds are more
compared to the large cap fund. But the risk is less as well as the returns are low.
But the risk and returns in the small and mid are high.
particular small mid Large

Total return 58% 64% 42%

Standard deviation 20% 19% 15%

G-SEC bond rate 7.38%

Sharpe ratio 2.53 2.98 2.3

BETA 0.00977717 0.089685643 0.054019

Table showing the Sharpe ratio and beta value of the funds of 2015-16

ANALYSIS: The Sharpe ratio when compared with all the 3 sectors the mid
cap is providing the higher value of the Sharpe ratio with 2.98 it refers that
the investors can receive extra returns from the volatility that they are
exposed to. Even with after adjusting the risk free return the portfolio is
providing the highest return in the sector. Any Sharpe ratio which is in the
bracket of more than 2 is considered to be very good for the investors.
 2.2016-17

sectors Average total return standard

deviation
small cap 24.25 -3% 0.770104292

mid cap 213.06 -5% 8.532234533

large cap 158.21 -8% 5.975299206

Table showing the average and standard deviation of the funds of 2016-17

ANALYSIS:
 The average expected return from the fund was around 24.25 but the fund had
performed negative returns due to the increasing rates on G-sec bonds. The
deviation from the average is around 0.03. And the fund is underperforming at -
3%.
 The average expected return for mid cap fund is around 213.06 but the actual
returns are at unfavourable position. with the negative deviation from the average
is 0.04
 The returns for large cap fund are negative 8% because of the plunge in the
sensex rates and the deviation form the average s around 0.03
 The risk factor or the volatile in the funds are negative in the year 2016- 17.
 particular small mid large

Total returns -3 -5 -8

standard 58% 59% 49%

deviation
G-sec bond 7.38%
rate
Sharpe ratio -0.1798 -0.08916 -0.1617

Beta 0.001753 0.033319 0.035411

Table showing the Sharpe ratio and the Beta value of the funds of 2016-17

ANALYSIS: The above table shows the Sharpe ratio and the beta of the funds. which
are in the negative returns the Sharpe ratio of small cap is -0.1798, mid cap is -0.0891,
and large cap is -0.1617. It means that the risk free rate of return that is government
bonds are performing better than the funds. And it is better to invest in the G-sec
bonds than the mutual fund. The negative Sharpe ratio means Bad in the view point of
investing.
3.2017-18:

Sectors average total standard

return deviation
small cap 29.45 32% 2.509

mid cap 241.8 25% 17.75

large cap 174.87 19% 9.95

Table showing the average and the standard deviation of the funds of 2017-18

ANALYSIS:
 The standard deviation of small cap fund is 2.509. The expected average returns
of the fund are 29.45. The deviation from the average return for the fund is
8.488%. And the total return small cap is around 39%.
 The Average expected return of mid cap is 241.8. The standard deviation of the
fund is 17.75. And the deviation from the average expected returns is around
7.34%. The total return of the mid cap funds are 25%.
 The standard deviation of large cap fund is 9.95. The expected average returns of
the fund are 174.87. The deviation from the average expected returns is 6%. The
total returns of the fund in the year 2017-18 is 19%
 In the above table we can see there is a high volatile in the small cap funds and
the least in large cap fund. where the risk is moderate in mid cap funds which is
giving 25% of returns with 7% of volatile. And the lower the risk factor the lower
the returns in large cap funds.
 Particular small cap mid cap large cap

Total return 32% 25% 19%

standard 20% 18% 15%

deviation
G-sec bond 7.38%
rate
Sharpe ratio 1.211808 0.935715 0.757423

Beta 0.012738 0.08896 0.050487

Table showing the Sharpe ratio and the Beta value of the funds of the year
2017-18

ANALYSIS: The Sharpe ratio for the small cap is 1.211 which indicates that
portfolio is performing better even in the risk adjusted returns. The higher the
Sharpe ratio means it has a good investment return than the risk free bonds.
The Sharpe ratio anything above 1 indicated as OK, and the Sharpe ration <1
is said to be a bad investment. and suggests to invest in the risk free bond.
Here the least Sharpe ratio is mid cap and large cap funds which are < 1.
where as small cap is giving highest rate of return even in the risk adjusted
return but the investor need to take risk as the volatile of the market is more.
which means to say it has high risk.
4.2018-19:

sectors average Total standard

returns deviation

small cap 39.77 12% 2.82

mid cap 308.1 8% 15.59

large cap 210.43 8% 8.86

Table showing average and standard reviation of the funds of the

year 2018-19

ANALYSIS:
 The total returns provided by the small cap in the year 2018-19 is 12%. with the
average expected return for the year us 39.77. The standard deviation of the fund
is 2.82. The deviation from the average return for the fund is 7%.
 The Mid cap and large cap funds are providing the return of 8% in the year. With
the average expected return is 308.10 and 210.43 respectively. The standard
deviation for the fund is 15.59 and 8.86. The deviation from the average returns
of the fund is 5% and 4%.
 The small cap fund is providing more returns on the fund but the risk factor or
the volatility in the small cap funds are around 7%. But the mid and large cap are
providing the less returns with the less volatile in the funds. The large cap funds
are providing 8 to 9% of returns on the investment with only 4% of deviation
from the average returns. The large cap would be better option for investor
looking for high returns with less risk.
 Particular small cap mid cap large cap

Total returns 12% 8% 8%

Standard 20% 15% 2%

deviation
G-sec bond 7.38%
rate
Sharpe ratio 0.21621 0.09134 0.08390

Beta 0.01240 0.06940 0.04000

Table showing Sharpe ratio and the Beta value of the funds of the
year 2018-19

ANALYSIS: The Sharpe ratio for the funds is 0.2162, 0.0913, and 0.0839
respectively. Which means that the investment made in the portfolio are not
providing expected average returns. The Sharpe ratio <1 denotes as “Bad”. It
states that if the Sharpe ratio is less than 0 it is better to invest in the risk free
government bonds rather investing in the funds.
4.2019-20

Sectors Average total returns standard

deviation
small cap 36.44 -17% 3.614

mid cap 290.50 -10% 17.745

large cap 215.74 2% 5.996

table showing the average and the standard deviation of the funds
of 2019-20

ANALYSIS:
 The small and mid are providing the negative returns in the year 2019-20. The
volatility in the funds are high that is standard deviation for small and mid cap
are 3.16 and 17.74 respectively. and it is providing the negative deviation in the
fund 9.9% and 6%
 The large cap funds are giving the favourable returns on the investment with the
2%. The standard deviation in the fund is 5.996 where the volatile in the funds is
less compared to small and mid cap funds. The deviation from the average
returns is 2.77%.
 In the above case the large cap funds are performing better. the fund is giving the
positive returns with less risk. The fund is expected to deviate at the rate of
2.77% for the average reruns. The large cap funds will be the suitable option for
the investors looking for less risk with moderate returns.
Particular small cap mid cap large cap

Total returns -17% -10% 2%

standard 31% 23% 17%

deviation
G-sec rate 7.38%

Sharpe ratio -0.76967 -0.75223 -0.30935

Beta 0.01144 0.06784 0.04121

Table showing the values of Sharpe ratio and the Beta value of
the funds of the year 2019-20

ANALYSIS: The Sharpe ratio for the year 2019-20 is -0.7696, -

0.7522, and - 0.3093 with the annualised standard deviation of
31%, 23% and 17%. All the three funds Sharpe ratio is less than
1. It refers that the investment return is lower than the risk free
rate. Even if the large cap is providing positive returns the share
ratio is less than 1. in which investing in risk free bond would
give the better returns than the funds.